singerlewak newsletter - april 2012

CEO UPDATE____________________________________________________________

Report Card is In on Economic Confidence

ASSURANCE & ADVISORY____________________________________________________________

CFO Essentials Briefing: Jobs Act Eases the Way for Small and Emerging Companies

TAX____________________________________________________________

Your Next Business Remodeling and Renovations may be Deductible Right Away

ENTERPRISE RISK MANAGEMENT SERVICES____________________________________________________________

Can I Convert My Bills, Transactions and Restaurant Reservations to the Cloud?

2012 SingerLewak AnnouncementSINGERLEWAK ANNOUNCES

April 2012

Contents______________________________________________________________________________________________________________________________________________________

2012 SINGERLEWAK ANNOUNCEMENT2 SINGERLE WAK ANNOUNCES NE W MANAGING PARTNER

SingerLewak is proud to announce that Jim Pitrat will assume the position of Managing Partner, as the third Managing Partner in SingerLewak’s 53-year history. The transition is in accordance with the firm’s strategic planning efforts targeting growth, succession planning and leadership development.

______________________________________________________________________________________________________________________________________________________

CEO UPDATE3 REPORT CARD IS IN ON ECONOMIC CONF IDENCE

I was catching up on some reading and caught an article from Vistage on CEO Confidence. This article was based on over 1800 CEOs nationally, and confirms what my Partners and I have been told by the majority of our clients.

______________________________________________________________________________________________________________________________________________________

ASSURANCE & ADVISORY5 CFO ESSENT IALS BRIEF ING: JOBS ACT E ASES THE WAY FOR

SMALL AND EMERGING COMPANIESCongress passed a group of bills that has come to be known as the Jobs Act. The Jobs Act is intended to improve and streamline the process for small businesses to become public and attract investors, by reducing SEC registration and reporting requirements.

______________________________________________________________________________________________________________________________________________________

TAX5 YOUR NE X T BUSINESS REMODELING AND RENOVAT IONS MAY

BE DEDUCT IBLE RIGHT AWAYThe Internal Revenue Service and Treasury Department published on December 27, 2011 temporary regulations on business capital expenditures in an attempt to provide guidance on types of expenditures that may be deductible instead of capitalizing and depreciating them over a period of time.

______________________________________________________________________________________________________________________________________________________

ENTERPRISE RISK MANAGEMENT SERVICES6 CAN I CONVERT MY BILLS, TR ANSACT IONS AND

RESTAUR ANT RESERVAT IONS TO THE CLOUD?The cloud takes on many forms today: from Dropbox to QuickBooks to Flixster to OpenTable and more. It seems that more and more of what we do each day is available on some sort of mobile device or our computers. Telephone calls are becoming far scarcer than ever and so is paper! But is it safe and what are the prime benefits?

April 2012

1 | SingerLewak April 2012

2 0 1 2 S I N G E R L E W A K A N N O U N C E M E N T

SINGERLEWAK ANNOUNCES NEW MANAGING PARTNERJIM PITRAT, CPA WILL ASSUME THE POSITION OF SINGERLEWAK MANAGING PARTNER AS OF JULY 1ST, 2012

SingerLewak is proud to an-nounce that Jim Pitrat will as-sume the position of Managing Partner, as the third Managing Partner in SingerLewak’s 53-year history. The transition is in ac-cordance with the firm’s stra-tegic planning efforts targeting growth, succession planning and leadership development.

Jim previously served as the firm’s Assurance & Advisory Practice Leader and currently holds a seat on the firm’s Executive Commit-tee. As Managing Partner, he will be responsible for providing stra-tegic direction and operational leadership to the firm.

“I am honored to follow such successful leaders as David Kra-janowski and Harvey Goldstein, and to have an opportunity to lead a firm with a long history of quality client service. Sing-erLewak has always been an innovator in the industry and has consistently demonstrated an ability to adapt to changing market places and regulatory environments, while remaining focused on serving and advis-ing clients to help them achieve greater success. I look forward to working with an excellent group of Partners and professionals to further expand our firm’s reputa-tion as a leader in the industry,” notes Jim.

David, having served as Man-aging Partner since 2001, has played a pivotal leadership role in growing 3 office regions, as well as spearheading the firm’s rebranding and national growth. David will now focus on a niche market segment that has been one of the key areas for Singer-Lewak since the firm’s begin-ning. “My objective is to grow our market presence within the Entrepreneur & Family-Owned Businesses sector which has been an important pillar for the firm since 1959. I take great pride in having Jim transition on as the next MP of the firm.”

Jim also states, “I want to thank David for his leadership and con-tributions to SingerLewak. David has had, and continues to have, a great passion for serving and working with Entrepreneur & Family-Owned Businesses, and we look forward to David assist-ing the firm in further growing this business sector.”

April 2012 SingerLewak | 2

SingerLewak is proud to announce that Jim Pitrat will assume the position of Managing Partner, as the third Managing

Partner in SingerLewak’s 53-year history

REPORT CARD IS IN ON ECONOMIC CONFIDENCEBY DAVID KRAJANOWSKI, CPA | MANAGING [email protected] | 949.261.8610

I was catching up on some read-ing and caught an article from Vistage on CEO Confidence. This article was based on over 1800 CEOs nationally, and confirms what my Partners and I have been told by the majority of our clients. The key points from the CEOs are:

•95% feel economic conditions, compared to a year ago, either improved (60%) or are about the same (35%)

•Projections for the next 12 months are for continued im-provement (49%) or about the same (43%)

• Investment expenditures over the next 12 months are pro-jected to increase (45%) or stay the same (45%)

•Revenue over the next twelve months is projected to increase (75%) or remain the same (20%)

•Projected profitability is expect-ed to improve (60%) or stay the same (31%)

•Pricing over the next twelve months will still be tough with increases by 42% with remain-ing the same equaling 52%

•Employee increases are expect-ed by 57% of the respondents, but slowly and steadily over the next twelve months

•Major business issues remain economic uncertainty (26%), staffing (18%), financial is-

sues such as finance, cash flow, profitability, etc (13%), growth (12%) and w political uncer-tainty (10%)

•Biggest challenges are customer retention and growth (26%), managing costs (22%) and liquidity (17%)

•Ease of credit is still 50/50 for those that need it

•Healthcare Reform Bill is rated as “bad” by 59% of those responding

•Lastly, 70% of businesses still want to be in the state they are in now

I don’t think anything above is shocking - more of a confirma-tion of what I hear on the street.

95% feel economic conditions, compared to a year ago, either improved (60%) or are about the

same (35%)

Projected profitability is expected to improve

(60%) or stay the same (31%)

C E O U P D AT E



CFO ESSENTIALS BRIEFING: JOBS ACT EASES THE WAY FOR SMALL AND EMERGING COMPANIESBY JIM PITRAT, CPA | [email protected]

Congress passed a group of bills that has come to be known as the Jobs Act. The Jobs Act is intend-ed to improve and streamline the process for small businesses to become public and attract inves-tors, by reducing SEC registra-tion and reporting requirements. It also creates the ability for private enterprises to raise capital from certain private investors without having to register the se-curities under the Securities Act.

IPO On-Ramp and Compliance Easing

The JOBS Act creates a new class of Public company called the Emerging Growth Company, or “EGC.” An EGC is defined under the Act as one that has annual gross revenues of less than $1 billion during its most recent fiscal year. The company also re-tains its EGC status until the oc-currence of one of a four defined events (this period is called the “on-ramp period”). These events are as follows:

•The first year after the compa-ny achieves revenue exceeding $1 billion.

•The first year after the fifth an-niversary of a company’s initial public offering.

•The date that more than $1 billion of non-convertible debt was issued (cumulative during the previous three-year period).

•The first year in which a com-pany becomes a large acceler-ated filer.

During the on-ramp period, the compliance requirements for the EGC are significantly reduced from existing requirements.

These reductions to the current requirements include the follow-ing:

•An EGC could provide two years of audited financial state-ments in its initial registration statement when it files for its IPO, instead of three years cur-rently required.• Important to remember is that

the Act does not change the requirement that in an initial 10K following the IPO, three years of audited statements would be required (this is un-less the company is a smaller reporting company).

The Jobs Act is intended to improve and streamline

the process for small businesses to become public and attract

investors, by reducing SEC registration and reporting

requirements

A S S U R A N C E & A DV I S O RY


•An EGC would not need to provide selected financial data for periods prior to those audited in its IPO registration statement.

• In order to allow a company to explore an IPO without expos-ing sensitive information, the entity’s pre-effective registration statement (and amendments) could be filed on a confidential basis. This allowance is provid-ed that the same materials are publicly filed no later than 21 days following the road show.

During the period in which an entity qualifies as an EGC, the Act reduces on-going compliance requirements after the public offering occurs. This easing of compliance requirements is de-signed to reduce compliance costs and make the process of main-taining compliance less restrictive to smaller companies. During

the period that a company is an EGC, a company would get the following benefits:

•An EGC would not have to furnish an auditor’s report covering internal controls over financial reporting. This does not change the requirement that the EGC would still have to provide management’s as-sessment of internal controls.

•An EGC would not have to comply with the provisions of the Dodd-Frank Act in respect of shareholder advisory votes concerning executive compen-sation..

•An EGC could adopt new or amended accounting standards as of the effective dates for Private companies.

•An EGC would not have to comply with any future PCAOB rules covering manda-tory auditor rotation, or modi-fications to the auditor’s report,

if such rules are adopted.

The Jobs Act also provides for reforms designed to make capital formation easier for EGCs. These reforms include the following:

•The Jobs Act requires the SEC to permit general solicitations in offerings to accredited inves-tors pursuant to Regulation D and to qualified institutional buyers under Rule 144A.

• Increases to $50 million from $5 million the amount of secu-rities that may be issued over a 12-month period.

• Increase the threshold that triggers SEC periodic reporting requirements to $10 million in assets and 2,000 shareholders, or 500 shareholders not quali-fying as accredited investors. (For banks, or bank holding companies, the trigger is 2,000 shareholders [whether accred-ited investors or not]).

In order to allow a company to explore an IPO without exposing sensitive information,

the entity’s pre-effective registration statement

(and amendments) could be filed on a confidential basis

This easing of compliance requirements is designed

to reduce compliance costs and make the process of maintaining compliance less restrictive to smaller

companies


Private Company Capital Raising

Under the JOBS Act, Private entities would be allowed to raise capital from a large pool of small investors without adding to the count of shareholders that would trigger the requirement to file with the SEC. This has come to be referred to as “crowdfund-ing.” The crowdfunding section exempts crowdfunding offerings from registration requirements.

In order to qualify for the crowd-funding exemption, a Private company must meet the follow-ing restrictive requirements:

•Sales of securities over a 12-month period could not exceed $1 million.

•All sales must be through a reg-istered broker-dealer or funding portal.

•Financial statement require-

ments are determined by fund-ing size as follows:

•For offerings of less than $100,000, the entity’s CEO would certify the company’s financial statements.

•For offerings between $100,000 and $500,000, the company’s financial statements would have to be reviewed by an independent auditor.

•For offerings in excess of $500,000, the company’s fi-nancial statements would have to be audited.

•The crowdfunding provision limits the amount of securities sales to any individual. These limitations are as follows:

•A maximum of 2% of the investor’s annual gross income for individuals earning up to $40,000 a year

•A maximum of 5% for inves-tors earning up to $100,000 a year

•A maximum of 10% for individuals earning more than $100,000

If the president signs the JOBS Act, the SEC will be required to establish new or amended rules for EGCs and Securities Act registration exemptions for crowdfunding.

Private entities would be allowed to raise capital

from a large pool of small investors without adding to the count of

shareholders that would trigger the requirement to

file with the SEC

YOUR NEXT BUSINESS REMODELING AND RENOVATIONS MAY BE DEDUCTIBLE RIGHT AWAY

The Internal Revenue Service and Treasury Department published on December 27, 2011 temporary regulations on business capital expenditures in an attempt to provide guidance on types of expenditures that may be deduct-ible instead of capitalizing and depreciating them over a period of time.

Starting on January 1, 2012, taxpayers may deduct costs incurred ongoing renovations and remodeling on tangible properties such as equipment and buildings for use in their busi-nesses. In order to qualify, the temporary regulations require the costs be incurred for main-taining the tangible properties in efficient operating condition in their original intended use of the taxpayer’s or business. In other words, there should not be any material addition or material increase in capacity, productiv-ity, efficiency, strength, quality, or output compared to the prior state of the properties, and the properties should not be placed in a new or different use in the taxpayer’s trade or business.

These temporary regulations pro-vide many other examples of

business capital expenditures that are deductible. One example pro-vides a capital expenditure sce-nario of a taxpayer refreshing the appearance and the layout of the taxpayer’s retail stores. Accord-ing to this example, the taxpayer may be allowed to deduct the expenditure as long as the work performed keeps the taxpayer’s building structures and systems in the ordinary efficient operat-ing condition that is necessary to continue to attract customers.

Even when a taxpayer’s capital expenditure does not meet the requirements and needs to be capitalized, these temporary reg-ulations provide relief by allow-ing a disposition of the replaced tangible property. For example, a taxpayer is currently required to continue depreciating costs for an old roof that is removed as a part of remodeling in addition to capitalizing and depreciating

costs for a new roof that is placed in service instead. Under these temporary regulations, the tax-payer may be able to deduct the undepreciated cost of the old roof in this situation.

Taxpayers may change to meth-ods of accounting in these regulations starting on January 1, 2012. In other words, they do not apply to 2011 year tax returns. A change to a method of accounting allowed under these temporary regulations will be eli-gible for automatic consent. The IRS will be issuing additional guidance on procedures for the method change.

As your tax and business advi-sors, we want to make sure you are aware of the planning oppor-tunities currently available. Please feel free to contact us with any questions you have regarding this or any other tax issues.

TA X


Taxpayers may deduct costs incurred ongoing

renovations and remodeling on tangible

properties


CAN I CONVERT MY BILLS, TRANSACTIONS AND RESTAURANT RESERVATIONS TO THE CLOUD?BY RICK MARK | SERVICE AREA [email protected]

The cloud takes on many forms today: from Dropbox to Quick-Books to Flixster to OpenTable and more. It seems that more and more of what we do each day is available on some sort of mobile device or our computers. Telephone calls are becoming far scarcer than ever and so is paper! But is it safe and what are the prime benefits?

The most easy to recognize benefit of the cloud is the ability to store data electronically, away

from your computer – where vi-ruses and bad things can happen (like a crash). Recovering data can be very expensive, and losing it altogether – well let’s not go there. The cloud was built on the premise of redundancy and safely storing data. Today the cloud has

expanded into fully operational business applications, personal management and more. Now, convenience is the buzzword when it comes to cloud consider-ations.

The ease and convenience of electronic transactions of all kinds is another winning benefit. With the advent of today’s super tablets and fast connectivity, it takes longer to write checks, call a restaurant for a reservation, rent a movie at one of those rental stores (do they still exist?), and even make appointments for your automobile maintenance. It’s all about freeing up time to allow us to either relax more or work more. After all, the subtleties of our lives take up a lot of our time – getting in digital control is very

important – efficiency is king!

If you are one of those who want to embrace this technology or you have already started but don’t know how to get in deeper, let’s look at a few solutions that help to bridge the gap for you.

The best timesaver out there has been around for a long while now – electronic banking. ALL

major banks and many smaller ones too, offer electronic bill pay, account management, and

E N T E R P R I S E R I S K M A N A G E M E N T S E R V I C E S

It seems that more and more of what we do each day is available on some sort of mobile device or

our computers

With the advent of today’s super tablets and fast connectivity, it takes longer to write checks, call a restaurant for a

reservation, rent a movie at one of those rental stores (do they still exist?), and even make appointments

for your automobile maintenance.

even have dedicated and secured mobile apps for your iPhone and many Android phones too. You can pay bills at will or schedule fixed payments automatically – imagine, never writing a check again! These services are very se-cure now, compared to what they were 4-5 years ago – and you can take the info with you on your phone…how cool is that?

What about the need to get reser-vations quickly? Not only getting them at the time you need them, but at the time you WANT to be at the restaurant. As an example, in recent travels, I called a res-

taurant for a reservation (the day before in fact) and could not get

a reservation at the time, or time-frame, wanted. I remembered OpenTable and installed the

APP on my phone and searched for places to eat at the time we wanted. Would you believe the restaurant we wanted originally had a spot open, suddenly? I quickly made the reservation and the next day – we were very happy and enjoyed the meal!

So whatever you think you can do manually – look into the digi-tal way of doing the same task. You may be very surprised at the quantity of minutes you can save.

These services are very secure now, compared to what they were 4-5 years ago – and you can take

the info with you on your phone…how cool

is that?


W W W.SINGERLE WAK .COM | 877.754.4557

DAV ID KR A JANOWSKI [email protected] | 949.261.8600

J IM PI TR AT [email protected] | 310.477.3924

DAVE FREE [email protected] | 310.477.3924

HARMEE T SINGH [email protected] | 310.477.3924

GLENN CARNIELLO [email protected] | 949.261.8600

SingerLewak is a leading regional accounting services firm in California with offices in Los Angeles, Orange County, Wood-land Hills, Monterey Park, San Diego, Silicon Valley and San Francisco. Serving California since 1959, SingerLewak has established a reputation for excellence as professionals with unparalleled expertise in the Accounting and Management Consulting industry. Providing the services of a large firm with a blended environment of practices, industry specializations and particular attention to hands-on service, SingerLewak continues to demonstrate leadership and industry growth year-over-year. Our client relationship approach and industry excellence is renowned.

We are nationally recognized as active community and profes-sional services partners, working among many sectors of the business world. Our core services deliver results whether it’s auditing, accounting, entrepreneurial business services, tax preparation, business management, SEC filings, transactions, enterprise risk management, forensic accounting, business valuation, litigation support, or consulting.

THE SKILLS YOU NEED. THE SERVICE YOU EXPECT.

OUR FIRM

singerlewak newsletter - april 2012

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